USD/CAD drifts lower amid sustained USD selling, sliding Oil prices could lend support

USD/CAD kicks off the new week on a weaker note amid a bearish US Dollar.
Bets for a 50 bps Fed rate cut and a positive risk tone weighs on the Greenback.
Sliding Oil prices could undermine the Loonie and help limit any further losses.

Haresh Menghani FXStreet

The USD/CAD pair struggles to capitalize on its modest gains registered over the past two days and attracts fresh sellers during the Asian session on Monday. Spot prices, however, manage to hold above the 1.3565 support zone, warranting some caution before positioning for any meaningful pullback from a three-week high touched last Wednesday.

The US Dollar (USD) languishes near the year-to-date (YTD) low amid rising bets for a more aggressive policy easing by the Federal Reserve (Fed), bolstered by signs of easing inflationary pressures in the US. Apart from this, a generally positive tone around the equity markets is seen denting demand for the safe-haven Greenback and exerting some downward pressure on the USD/CAD pair. The downside, however, seems cushioned in the wake of weaker Crude Oil prices, which tends to undermine the commodity-linked Loonie.

The worse-than-expected Chinese macro data released over the weekend raises concerns about a slowing fuel demand in the world's second-largest economy and the world's top oil importer. This, in turn, fails to assist Crude Oil prices to capitalize on last week's recovery from the lowest level since May 2023. Furthermore, hopes for additional interest rate cuts by the Bank of Canada (BoC) might keep a lid on any meaningful appreciating move for the Canadian Dollar (CAD) and lend support to the USD/CAD pair.

Traders might also refrain from placing aggressive bets and prefer to move to the sidelines ahead of this week's key central bank event risk – the outcome of the highly-anticipated FOMC meeting on Wednesday. The US central bank is widely anticipated to lower its borrowing costs, though investors remain divided over the size of the rate cut. Hence, the crucial decision, along with the Fed's policy outlook, will play a key role in influencing the USD price dynamics and determining the next leg of a directional move for the USD/CAD pair.

US Dollar PRICE Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Canadian Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.26%	-0.29%	-0.48%	-0.21%	-0.32%	-0.27%	-0.22%
EUR	0.26%		-0.09%	-0.26%	0.00%	-0.12%	-0.08%	-0.00%
GBP	0.29%	0.09%		-0.24%	0.09%	-0.04%	0.02%	0.09%
JPY	0.48%	0.26%	0.24%		0.27%	0.21%	0.21%	0.20%
CAD	0.21%	-0.01%	-0.09%	-0.27%		-0.19%	-0.07%	-0.12%
AUD	0.32%	0.12%	0.04%	-0.21%	0.19%		0.05%	0.11%
NZD	0.27%	0.08%	-0.02%	-0.21%	0.07%	-0.05%		0.07%
CHF	0.22%	0.00%	-0.09%	-0.20%	0.12%	-0.11%	-0.07%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

Japanese Yen gains ground as traders await Fed rate decision

The USD/JPY pair loses ground to near 160.25 during the early European trading hours. Traders prefer to wait on the sidelines ahead of the US Federal Reserve interest rate decision under new Chair Kevin Warsh later on Wednesday.

AUD/USD holds steady above 0.7050; looks to Fed for fresh impetus

AUD/USD is consolidating above mid-0.7000s in the Asian session on Wednesday as traders await the outcome of a two-day FOMC meeting due later in the day. In the meantime, the optimism over an interim peace deal between the US and Iran keeps the US Dollar bulls on the defensive. This, along with the RBA's hawkish pause on Tuesday, acts as a tailwind for the pair.

Gold consolidates above $4,300 as traders look to Fed rate decision for fresh impetus

Gold struggles to capitalize on its weekly gains, though it holds above the $4,300 mark through the Asian session. The latest optimism over an interim US-Iran peace deal keeps the US Dollar on the defensive, which is seen supporting the bullion. The commodity remains below the weekly swing high set on Monday and a technically significant 200-day SMA level.

Bitcoin holds $65,000 as Uniswap and Worldcoin extend rally

Bitcoin (BTC) is experiencing headwinds above $65,000 following the Bank of Japan’s rate hike to 1% on Tuesday. Still, Uniswap (UNI) and Worldcoin (WLD) continue to rally amid rising retail interest, while Bitcoin’s recovery grows heavy. Bitcoin edges higher at press time on Wednesday, inching closer to $66,000 as it maintains a mixed near-term tone following the recent rebound from $60,000.

The most important event will be the Fed meeting with Mr. Warsh now in charge

The most important event will be the Fed meeting on Wednesday, with Mr. Warsh now in charge. As more than one analyst points out, the case for holding rates the same is strengthened by the Iran deal and the prospect of the Strait re-opening, although nobody thinks Warsh can marshal enough doves to do a cut this time.

Why a hawkish RBA is no longer enough to lift the Australian Dollar

The Reserve Bank of Australia delivered more than what markets expected: a hawkish hold that should have supported the Aussie. But markets widely ignored it, focusing instead on slowing economic growth and proving that central bank messaging alone isn’t always enough to drive currencies.